Originally published May 11, 2007

The papers tell us that the older folk in this Country now control three-quarters of our wealth and because the population is living longer this will rapidly increase. It seems that when the figures were compiled everyone over fifty was put into this category.

In departments dealing with Employment, Pensions etc. people are no longer considered old until they reach their sixty-fifth year. As our life expectations lengthen perhaps the terms used for various age groups should be revised.

In this Country around 34% of the population are over fifty and own some 60% of all savings. They are also responsible for more than 40% of all consumer spending. This share is expected to go up as their numbers increase in future years.

How can they be sure of this? Have they wondered why these OLDER people have more money at their disposal than the younger generations. It has to be remembered that among this 34% of our population there are many Pensioners surviving on the State Pension. They certainly are not the big spenders!

It would appear that the group most likely to be responsible are those between fifty and sixty-five. It must be clear to them that if their pension is not a large one it could be a liability when they retire and it puts them just over the limit for the various State handouts. Any pension taken out needs to be a substantial one to ensure retirement can be enjoyed without money worries.

Successive Governments have urged us to buy our own homes, pay into a pension plan and save as much as we can. Oh yes! Anything we have left at the end of the week can be put on the lottery where some of it will be set aside and go towards helping a ‘good cause’.

Those who have followed that advice will eventually have a decision to make. If they retire with a reasonable pension, moderate savings and own their property they have the problem of disposing of their assets when they die. Most would like to leave everything to their children, with very little being taken in taxes.

People in their fifties can see how the State has to care for Senior Citizens who have very few assets when they retire while those with modest savings who own their property have to fend for themselves. This is highlighted if one of them is unfortunate enough to have a breakdown in health and requires Social assistance. All such help is ‘Means Tested’. When they look ahead they see house prices continuing to rise and eat away at the amount of savings they will be allowed before Inheritance Tax is deducted. They can give away no more than £3,000 in total each financial year.

So what are people doing about it?
If they are still quite young they are renting instead of buying their home. The past has shown pensions to be too long term, complicated and unreliable so is not likely be considered until a later date. Those who are older and in their fifties with a house and mortgage will find little reason to be concerned about saving and will spend their wages on anything they want. More so if they already contribute to a pension scheme.

Many people have paid off large mortgages on substantial properties and retired on a small pension and very little savings. They are probably only too pleased to take Equity Release on their property to raise cash to spend and at the same time reduce their assets below the tax limit.

Those are some of the reasons why the over fifties might be responsible for 40% of our consumer spending. Who knows what will happen after this generation has moved on? How many of them will have adequate private pensions? What age group will have the money to spend in the years that follow?

We do know that the percentage of older people will get bigger and the indications are that fewer of them will own their homes.

There is a strong feeling spreading in many areas that it is better to spend and enjoy your assets before you retire rather than save to pay for your own care. If the current trend of borrowing continues to increase at the present rate, many will find themselves retiring with large debts instead of savings.

It will be interesting to see what new steps the Government takes to make it worthwhile for the Public to be thrifty again.

valley lad – [NINE]